Key Takeaways

  • A Texas Tax ID, also called a Texas State ID Number or Texas Identification Number (TIN), is issued by the Comptroller and required for tax and payment purposes.
  • Businesses use both a federal EIN and a Texas State ID Number for filing taxes, managing payroll, and securing business permits.
  • You can apply for a Texas Tax ID online, by mail, or fax, though online is the fastest option.
  • The Texas State ID Number is needed to receive state payments, file franchise taxes, and maintain compliance with the Comptroller’s office.
  • Different entities, including sole proprietors, corporations, LLCs, and nonprofits, all may need a Texas Tax ID depending on their business activities.

What Is the Texas Tax ID?

A Texas Tax ID number is assigned by the state's comptroller or franchise tax board. The federal Employer Identification Number (EIN) is a nine-digit number issued to a business or company by the IRS. As part of the application process for getting your Texas Tax ID, you must be able to provide the federal EIN. Although it is an Employer Identification Number, it does not mean that you must have employees. 

If you are a sole proprietor, your Social Security Number serves the same purpose as the EIN for the sales and use tax permit application. There is a distinct differentiation between the two sets of numbers, even though they both have the same amount of digits. The EIN begins with two numbers, followed by a hyphen, then the remaining seven numbers. 

Texas State ID Number vs. Federal EIN

A common source of confusion for new business owners is the distinction between a federal Employer Identification Number (EIN) and a Texas State ID Number. While both serve as identification tools, they are not interchangeable:

  • Federal EIN: Issued by the IRS, used for federal tax filings, payroll reporting, and opening business bank accounts.
  • Texas State ID Number (TIN): Issued by the Texas Comptroller of Public Accounts, used for state-level obligations like paying franchise tax, receiving payments from the state, and filing sales and use tax returns.

In short, you must have an EIN to apply for your Texas State ID Number, but the state number is unique to Texas and cannot replace your EIN.

How Is the Texas Tax ID Used?

Your LLC can do all, but not limited, to the following with an EIN:

  • File your business's taxes
  • Open investment, savings, or business checking accounts
  • Handle employee payroll, if you have workers employed
  • Get credit cards under the name of your LLC
  • Obtain commercial lines of credit for business loans
  • Apply for industry-specific business licenses

When financial and banking institutions act as lenders for transactions, they conduct a search for confirmation of your business as a legitimate entity in Texas. If a lender is unable to identify your sales tax permit or Texas Tax ID, not only will you be unqualified for a loan, but you might also be prohibited from opening a business checking account. 

An Employer Identification Number is also necessary to obtain any permits for sales required by your business demands, as well as to render additional franchise tax payments to the state of Texas. You must have approval for your LLC by the state before applying for your EIN to eliminate the possibility of having an EIN issued to the incorrect LLC.

Who Needs a Texas State ID Number?

Not all businesses require a Texas State ID Number, but many do. Entities that typically need one include:

  • Corporations and LLCs that must pay franchise tax.
  • Sole proprietors who hire employees or collect sales tax.
  • Nonprofits that apply for tax-exempt status or handle state payments.
  • Vendors and contractors who do business with the state of Texas and must be set up in the Comptroller’s payment system.

If your business plans to sell taxable goods or services, hire employees, or interact with state agencies financially, you’ll almost certainly need a Texas State ID Number.

How Do You Apply for an EIN?

There is no filing fee associated with an application for an Employer Identification Number from the IRS. There are three options to choose from when ready to apply:

  • Fax
  • Mail
  • Online

If you want to receive your EIN quickly and easily, the best choice is to complete the online form. By mail, it could take up to four weeks for processing, while faxing the application can delay your EIN assignment by four days. 

To complete the online form, you are required to answer some questions to identify your firm as a business entity to the IRS for tax purposes. After which, you can save, download, and print out your EIN, along with a confirmation letter. 

The most important information you will need before completing the online process is:

  •  Social Security Numbers of all the LLC members if you and any other members are U.S. citizens
  • Individual Taxpayer Identification Numbers (ITINs) if you or other members are foreign nationals

If the latter and you do not have an Individual Taxpayer Identification Number, you must first obtain an ITIN before you can apply with the IRS for an EIN. You can do so by calling the IRS at 800-829-4933. Also, you can find additional contact numbers for the Internal Revenue Service by navigating online to https://www.irs.gov/help/telephone-assistance.

There is not much difference between the application questions and information required if you are a Single-Member LLC or Multi-Member LLC. Also, the state where your LLC originated does not alter the online form significantly because it is a federal process, which is not state-specific. 

How to Apply for a Texas State ID Number

Once you’ve secured your federal EIN, you can apply for your Texas State ID Number through the Comptroller’s office. The process usually involves:

  1. Completing the Texas Online Tax Registration Application on the Comptroller’s website.
  2. Providing your federal EIN or Social Security Number (for sole proprietors).
  3. Listing business details such as legal entity type, owners, addresses, and the nature of your business.
  4. Submitting supporting documents if required (for example, formation documents for corporations or LLCs).

Online applications are generally processed within a few business days, while mailed forms may take several weeks.

Using Your Federal EIN To Get Your State Tax Identification Number

The Texas Tax ID is a unique number assigned to businesses by the state. If you do not have your EIN, you can still apply for a Texas sales and use tax permit. Until you receive your federal Employer Identification Number, the comptroller's office will only be able to issue a license with a temporary number. Only after you have obtained your EIN from the IRS can you follow up with the state franchise tax board to get your Texas Tax ID and get your business in operation properly. 

Maintaining and Using Your Texas State ID Number

After you receive your Texas State ID Number, you are responsible for keeping it active and in good standing. Key responsibilities include:

  • Filing franchise tax reports: All taxable entities must file an annual franchise tax report, even if no tax is due.
  • Collecting and remitting sales tax: Businesses selling taxable goods or services must report and remit sales tax regularly.
  • Updating information with the Comptroller: If your business address, ownership, or structure changes, you must update your account.
  • State payments and contracts: Your Texas State ID Number is required to receive funds if you are a state vendor or contractor.

Failure to comply with filing or payment obligations can result in penalties, interest, or even loss of good standing with the state.

Frequently Asked Questions

  1. Is a Texas State ID Number the same as an EIN? No. An EIN is issued by the IRS for federal tax purposes, while the Texas State ID Number is issued by the Comptroller for state-level obligations.
  2. Do sole proprietors need a Texas State ID Number? Yes, if they hire employees, sell taxable goods or services, or contract with the state.
  3. How long does it take to get a Texas State ID Number? Online applications are usually processed in a few business days. Paper applications can take several weeks.
  4. Where can I check the status of my Texas State ID Number? You can search your account status on the Texas Comptroller’s Franchise Tax Account Status page.
  5. What happens if I don’t use my Texas State ID Number? If you fail to file required reports or remit taxes, your business could face penalties, lose good standing, or have its right to transact business in Texas revoked.

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